Engaging the private sector in post-conflict recovery...and peace, and potential roles that the...

THIS PAPER CONSIDERS the connection between three topical policy themes. The first is

South Africa’s emerging Development Partnership Agency, whose attributes and origins give

it an imperative to build relationships with other development actors. The second is the 20-

year legacy of the South African government’s involvement in post-conflict reconstruction and

development (PCRD), and peacebuilding activities in Africa. The third theme is the dynamic and

diverse contemporary business environment across Africa. The private sector’s role in helping

drive sustainable and inclusive growth has a strong bearing on the prospects for achieving

long-term developmental goals on the continent. The question that arises from these contexts

(i.e. partnerships, post-conflict and private sector) is what role the private sector might play as

a development actor in SADPA’s future PCRD efforts.

The paper addresses this question in four parts. The first outlines issues at the nexus of business

and peace, and potential roles that the private sector might play in situations of fragility and post-

conflict recovery. The second part briefly considers the growing trend for donors to engage the

private sector in development policy generally, and more specifically in PCRD activities. The third

part looks at the particular policy context for SADPA’s engagement and addresses why SADPA

should engage with business in pursuit of government’s PCRD strategies. It considers South

Africa’s wider strategy of economic diplomacy, and includes insights from Brazil’s development

Jolyon Ford

SummaryEconomic revitalisation and job creation are major components of the effort to

consolidate sustainable peace in post-conflict settings. Public institutions tend to

lead efforts to stimulate recovery. Yet the private sector has a role to play too, as

post-conflict revitalisation and reconstruction offer commercial opportunities. There

is a growing trend among donors and governments towards engaging business to

meet development goals. At the same time, South Africa is looking to coordinate its

various development cooperation activities through the South African Development

Partnership Agency (SADPA). This makes it relevant to examine whether, and how,

SADPA might support private-sector development and engagement in fragile and

post-conflict African settings.

ISS PAPER 269 | OCTOBER 2014

Engaging the private sector in post-conflict recoveryPerspectives for SADPA

2 ENGAGING THE PRIVATE SECTOR IN POST-CONFLICT RECOVERY

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agency. The fourth and final part considers some modalities of how SADPA might

engage with the private sector in conflict situations.

Given the lack of precise definitions in this field, this paper uses the term ‘PCRD’

broadly to encompass peacebuilding initiatives and governance reforms rather than

solely physical reconstruction activities. The focus here is on post-conflict settings, but

the paper also reflects more generally on SADPA’s role in fragile states and situations.

The paper also concentrates on policy approaches towards engaging existing or

potential business actors and investors (i.e. private-sector engagement). It is less

focused on donor policies to stimulate local business creation and expansion (i.e.

private-sector development).1

The discussion proceeds on the basis that the ‘private sector’ comprises many

industries, which have very different incentives when it comes to fragile and conflict-

affected states. The paper includes local and third-country businesses in the definition

of ‘private sector’, and not just South African firms with which SADPA might engage.

The paper aims to offer perspectives on how Pretoria might define and engage

business as a development stakeholder. It is not intended as a general review or

critique of SADPA, nor of the complex political-economic links between South Africa’s

foreign policy and its business community.

Business, conflict and fragility

The role of an economic agenda in armed conflict began to receive policy and

scholarly attention in the 1990s, in the context of the control of natural resources in

the long-running subregional civil wars in West Africa. It remains a complex and much

debated issue, just as lack of consensus surrounds policy prescriptions for post-

conflict economic recovery.2 For convenience, private, for-profit corporate actors in

post-conflict settings can be divided into two broadly distinct conceptual fields.3

The first is business’s indirect role in, and impact on, rebuilding peaceful post-conflict

societies. Here the question is how local and foreign businesses can contribute, as

economic actors, to post-conflict recovery, returning conflict settings to a normal

development trajectory. At issue is how business contributes to recovery as a

corporate entity through conventional commercial activities. Policy focuses on how to

attract, stimulate and support revitalisation of private economic activity, and how to

design and regulate a business climate that is conducive to investment, growth and

job creation.4

Fragile and conflict-affected areas are caught in a catch-22 situation: they are the most

in need of revitalisation, yet struggle to attract investment – because they are seen as

fragile. Policy innovation and flexibility are therefore needed to attract business. There

is increasing policy attention given to the economic-recovery dimensions of post-

conflict peacebuilding. This acknowledges that without a tangible economic benefit

– or so-called peace dividend – political deals will often prove unsustainable. In this

sense, the private sector is clearly a stakeholder in PCRD and in reducing fragility, and

a development actor that needs to be engaged by policy institutions.

Fragile and conflict-affected areas are caught in a catch-22 situation: they are the most in need of revitalisation, yet struggle to attract investment

THE APPROACH OF POST-CONFLICT POLICY HAS BEEN TO FOCUS ON INSTITUTIONAL DESIGN, GOVERNANCE AND

POLITICAL PROCESSES

SINCE

3ISS PAPER 269 • OCTOBER 2014ENGAGING THE PRIVATE SECTOR IN POST-CONFLICT RECOVERY

The second broad field relates to both negative and positive

impacts that businesses might have on conflict prevention

and peacebuilding – either in the normal course of their

operations or in their efforts to help or hinder such processes.

Some businesses may provide support to national or

localised peacebuilding initiatives. At the very least, they will

typically share the concerns and objectives of institutional

peacebuilders. Indeed, local and foreign businesses may

have greater interest in achieving sustainable peace than

external peacebuilding actors. Corporate actors may lack the

legitimacy, authority and responsibilities of public peacebuilding

actors. However, like civil society, the private sector is arguably

a legitimate social source of inputs, with views and concerns

when it comes to peacebuilding, and external peacebuilding

actors should seek that input.

External institutions may also have a regulatory role to play in

support of (often low-capacity) post-conflict host authorities.

That role may involve shaping the behaviour of private-sector

actors where their activities might undermine a fragile situation.

An enterprise’s actions may often unwittingly aggravate or

expose social fault lines, compromise land claims, affect

ecosystems, discriminate ethnically, or result in corruption,

resentment and rights abuses, and so on. In particular, the

close links between natural resources, land, identity and

insecurity in many regions increase the importance of how

business operates and how it is governed.5

PCRD programmes are complex, highly political, and usually

constrained in terms of time and resources. Private-sector

involvement in such contexts is therefore more difficult and

controversial.6 Although there is no single type of post-

conflict society, the effects of conflict on state capacity tend

to exacerbate the policy challenges of kick-starting and

developing local enterprises, of reassuring and supporting

foreign investors, and of promoting responsible, conflict-

sensitive business activity.7 At the same time, the importance

of the private sector to the sustainability of PCRD processes

makes it imperative to find ways to stimulate private-sector

activity after conflict and to leverage the developmental impact

of business in appropriate ways.8 The unique conditions of

early post-conflict periods also often provide a window of

opportunity for donors and others to do so.

Engaging business in post-conflict recovery

External peacebuilding and development partners need a

strategy to maximise the potential positive contributions the

private sector can make towards PCRD and minimise the

possible harmful side effects of new or renewed business

activity. Until recently, policymaking was blind to business as

a relevant and legitimate stakeholder in conflict prevention,

post-conflict recovery and peacebuilding.9 Post-conflict

policies have tended to be too narrowly focused on building

the capacity of state mechanisms,10 to the neglect of other

non-state sources of governance and peacebuilding, such

as the private sector. Generally, since 1990 the approach of

post-conflict policy has been to focus on institutional design,

governance and political processes, rather than on the issues

of economic recovery and livelihood.

Meanwhile, institutions such as UN Peacekeeping have long

focused on the political and security dimensions of post-conflict

recovery. Such institutions tended to view the private sector (and

economic rejuvenation) as part of a later stage of recovery, and

as the institutional responsibility of development agencies and

the World Bank.11 A consequence of this perceived role division

was that entities with a peacebuilding mandate tended to neglect

the role business can play in PCRD.

However, three developments have now altered institutional ways

of seeing the private sector’s potential role in fragile states, and

these have a bearing on SADPA’s future agenda.

Firstly, fragility, conflict and violence have risen to the top of the

global development and aid effectiveness agenda, culminating

in the New Deal on Fragile States.12 Secondly, greater emphasis

is being given to economic aspects of post-conflict recovery

and conflict-prevention. There is now widespread recognition

that conventional development cooperation has not yielded

results in conflict-affected countries. This is driving greater

flexibility and innovation in the approaches to development

programming in these environments. Thirdly, there is heightened

development-policy interest in productive public-private

cooperation on this issue and in the private sector’s role in

development more generally.

Global business leaders are driving some of this debate

and activity. In development circles, traditional donor and

development-finance organisations are pushing for greater

involvement with the private sector. This is seen in terms of

placing more emphasis on developing the local private sector in

recipient countries, and engaging with business so it can make

an impact on development priorities and processes. Increasingly,

donors will see engagement with foreign investors as linked to

stimulating local business and job creation, by helping build the

capacity of local smaller firms to meet foreign firms’ supply-chain

External peacebuilding and development partners need a strategy to maximise the potential positive contributions that the private sector can make towards PCRD


PAPER

and service-provision needs. In many cases, host authorities

will require investors to develop such backward linkages into

the local economy.

Therefore, SADPA would be created in the context of a global

development debate that increasingly emphasises the private

sector’s developmental role and its important stake in shaping

and implementing the development agenda. This pragmatism

is partly a result of Western budgetary austerity, which is

driving many donors to turn to business for their resources. It

is also partly a function of recognising the need for business

and government to jointly shoulder the delivery of equitable,

inclusive growth and sustainable development.

For example, the 2014 high-level Global Partnership for

Effective Development Cooperation summit made it clear

that business is a vital component in development,13 as

did the 2013 UN high-level panel report on the post-2015

development agenda.14 In 2012 the UN’s annual peacebuilding

report for the first time expressly called for engaging the private

sector in post-conflict processes.15 Leading donor agencies

are swiftly developing policy frameworks for enhanced private-

sector development programming and greater engagement

with business, including firms of other nationalities operating in

the recipient countries.16

Before turning to SADPA’s domestic policy, it is important to

note that there are critics who remain unconvinced about

the positive impact of engaging business in the development

agenda.17 In addition, many donor policymakers are wary

of ‘picking winners’ (i.e. favouring particular firms and

businesspeople for development or PCRD initiatives). Other

policymakers are concerned about development burdens

gradually being shifted away from the state onto the private

sector – and many corporate leaders share such concerns. It is

also worth noting that the rhetoric on engaging business in the

development agenda is not matched by a clear understanding

of how it can be achieved or the capacity to do so. This is

particularly true of conflict-affected environments, where

statements about the need to attract enterprise and investment

are seldom matched by evidence of successful programmes.

Firms will either operate in fragile areas regardless of

policymaking efforts or, because of perceived risk, they will not

operate there no matter what the incentives policymaking can

offer. Furthermore, lack of trust, misunderstanding and the fact

that business executives and development programmers have

different objectives hamper engagement.18

Should it choose to engage the private sector (generally and

in relation to PCRD), SADPA would not be the only agency to

tackle the challenges of whether this policy is inappropriate or

incompatible – or to address resistant institutional mindsets,

and lack of capacity to engage business. Yet, on balance,

these challenges are no different in kind or scale from any

other type of development-policy dilemma or risk. As argued

elsewhere, these policy risks are in principle outweighed by

the challenges faced by fragile and post-conflict countries –

challenges that require innovation and partnership of a more

flexible kind to overcome them.19 These policy risks are also

outweighed by the development and commercial efficiency

and effectiveness gains that can be realised by appropriate

strategic alignment between public agencies and the private

sector in fragile states.

SADPA and private-sector engagement: policy

The above discussion is relevant to the context in which

SADPA will be established because it will need to engage

with established donors and recipient countries. These will

have generally accepted the principle that the private sector

is a development actor to be consulted and engaged, and a

major stakeholder in PCRD. But, in terms of how SADPA might

engage the private sector, it is important first to ask whether

it should do so in the context of South Africa’s foreign policy

generally. This question arises because of the policy risks and

uncertainties associated with closer public-private interaction

(discussed above). This section unpacks those risks in the

South African context and points to the fact that they are

ultimately manageable.

A brief background to SADPA is necessary. A cornerstone of

South Africa’s post-1994 foreign policy has been efforts to

foster self-sustaining peace and prosperity in the rest of Africa,

especially in the immediate sub-region. Successive policy

frameworks and diplomatic practice have made clear that two

broad factors drive this approach. Pan-Africanist solidarity and

South-South cooperation reflect the sentiments and sensibilities

of the ruling ANC-led alliance. Yet these exist alongside an

evident, and increasingly significant, assessment of South

Africa’s own national self-interests.

This factor is informed by negative aspects, namely the

political and economic cost to South Africa of poverty,

underdevelopment, conflict and mass migration in the

sub-region. It is also informed by more positive aspects:

the opportunities to increase the prosperity and wellbeing

of South Africans, by helping create more peaceful and

It is important to note that there are critics who remain unconvinced about the positive impact of engaging business in the development agenda

5ISS PAPER 269 • OCTOBER 2014

developed societies and markets to the north. The current foreign-policy white

paper places great emphasis on regional integration and economic development,

emphasising partnerships in trade and investment, infrastructure provision and

technical assistance.20

Successive post-apartheid governments have engaged in developmental and

peacebuilding initiatives in various parts of Africa.21 The most significant of these,

at least in financial terms, have been the infrastructural and other projects of the

Southern African Development Bank.

Pretoria has also taken a particular interest in the African Union’s (AU) peace and

security architecture, in conflict prevention, mediation and resolution, and in PCRD.

Without going into the debate about definitional aspects of peacebuilding and

post-conflict recovery, the AU’s 2006 framework on PCRD takes a comprehensive

approach to the sort of activities that are included in it.22 The 2003 AU Peace and

Security Council protocol envisaged an enhanced mandate for countries affected

by violent conflict, going beyond political engagement to establishing conditions of

political, social and economic reconstruction of society and government institutions.23

Through the AU, South Africa has largely focused on peacekeeping and (lately) peace-

enforcement in the rest of Africa, and aside from high-level conflict-related diplomacy

and mediation has taken a fairly militaristic approach to post-conflict stabilisation.24

This practice has been shifting towards a more comprehensive approach that takes

into account the wider security-development dynamic.25 This would suggest that long-

term peacebuilding requires more than simply the ability to project force or engage in

high-level diplomacy.

Mooted since 2007, SADPA is intended to have both an internal and external

coordination role. The internal dimension will be to provide coherence to the various

state institutions that are involved in foreign development. The external dimension will

be to build partnerships with recipient African countries, donors – including BRICS

and other emerging donors – and international organisations.

It is planned that SADPA will serve South Africa’s twin core foreign-policy initiatives

indicated above. The rationale for its creation appears likewise to have two pillars.

One is that South Africa’s own experience in pro-poor development, transitional

governance and reform, and its experience as a major recipient of aid recipient

after 1994, have given its institutions and agencies experiences that are of value

to developing African states. The other, less explicit rationale is that South Africa’s

‘African-ness’ will give SADPA an advantage in terms of its legitimacy, access and

affinity in the eyes of traditional donors,26 while reinforcing the self-reliant notion of

‘African solutions to African problems’.27

O’Riordan is one of a group of researchers who have questioned whether SADPA’s

performance will be any better than its godparent, the Department of International

Relations and Cooperation (DIRCO), at projecting South Africa’s image and interests

effectively.28 Partnership is at the heart of the SADPA model: Pretoria wishes to be

Partnership is at the heart of the SADPA model: Pretoria wishes to be seen very much as a development partner, and not a donor

THE UN’S ANNUAL PEACEBUILDING REPORT FOR

THE FIRST TIME EXPRESSLY CALLED FOR ENGAGING THE

PRIVATE SECTOR IN POST-CONFLICT PROCESSES

IN


PAPER

seen very much as a development partner, and not a donor.29 To some extent, SADPA

is obliged to adopt this tack, since its budget is small in African aid terms. Moreover, it

has limited experience of external development and PCRD compared with established

donors and institutions.

SADPA will clearly need to consider how it adds value compared to what traditional

and other emerging donors can offer, both generally and in respect of national aid

coordination and implementation structures.30 If it follows a similar path to South

Africa’s development-security policy, SADPA’s programming is likely to be closely

related to conflict-affected countries. Its success will therefore depend on approaching

peacebuilding activities and post-conflict development interventions in ways that

differentiate it from other actors, achieve efficiency, and complement others’ efforts

and the host country’s priorities and preferences.

In parallel with South Africa’s history of diplomatic, developmental and trade-

related activities in the rest of Africa, its privately owned companies have since

the early 2000s greatly enlarged their African footprint. South Africa has for some

years been the leading direct investor in sub-Saharan Africa by number of new

projects, and one of the leading investors by project value, especially in the non-

oil-and-gas sectors. Its firms have generally exhibited strong growth in financial

services, telecommunications, consumer goods, construction and other industries.

Increasingly, Pretoria’s larger state-owned enterprises have joined this trend,

operating in Africa for commercial gain, especially in the energy and transport-

infrastructure sectors. They join an increasingly crowded field in the contemporary

African growth story, a complex but tangible enough phenomenon, which does not

require elaboration here. In this context, it is difficult to conceive how SADPA could

design a credible approach to unlocking human potential in PCRD contexts without

engaging the private sector, which has driven much of the economic growth in the

continent in recent years. This will require overcoming what research reveals has

been very limited engagement by South African policymakers with non-state actors,

including business, in the PCRD environment.31

South Africa’s economic diplomacy: From ambivalence to pragmatism

The role of business in driving transformative economic activity in Africa would suggest

that it should obviously be involved in the new development partnership agency. Yet

it is going to be difficult to separate SADPA’s possible engagement with the private

sector (at least the South African private sector), whether or not in PCRD contexts,

from past patterns of business–government relations on external issues. This legacy

reveals what still needs to be done in terms of bridging gaps in understanding, and

building trust and rapport between the government and South African business in

relation to development in Africa.32

The ANC-led government’s policy on Africa has long been marked by its sensitivity to

ensuring that it distances itself as far as possible from the unacceptable approach of

the apartheid authorities. Together with ambivalence towards big business within parts

It is difficult to conceive how SADPA could design a credible approach to unlocking human potential in PCRD contexts without engaging the private sector

SOUTH AFRICA HAS, FOR SOME YEARS, BEEN ONE OF THE LEADING INVESTORS BY PROJECT VALUE IN SUB-

SAHARAN AFRICA


of the ANC-led alliance, this approach has had unfortunate

consequences for the country’s private-sector firms seeking to

enter and expand in Africa. These companies have generally

not enjoyed the levels of diplomatic cover and facilitation

that other countries have provided business. South Africa’s

private firms have generally done well despite, not because of,

government’s diplomatic approach. Especially around 2007,

the government appeared to be more concerned about how

South African business might harm the country’s image in

Africa, as opposed to actively promoting its own commercial

interests abroad. One result of this sentiment was the 2007

push from within the ruling party for a voluntary code of

conduct for firms operating externally. This came despite the

fact there was no evidence that South African businesses

perform any worse than firms from other countries in terms of

their social, environmental or governance impact in Africa.33

In government’s approach to its Africa policy there are still

traces of this ideological and idealistic leaning in terms of how

the private sector operates outside South Africa. However,

since about 2009 the government’s approach to diplomatic

facilitation and support has become far more pragmatic. This is

partly out of recognising the extent of both the opportunity and

competition South African firms face in Africa.34 Zondi notes

that domestic political pressures have forced Pretoria to place

economic self-interest more at the forefront of its previously

values-driven foreign policy.35

In 2010 the Presidency announced an ‘Economic diplomacy

strategic framework’ to support commercial interests abroad

of private and state-owned South African firms. This policy

shift incorporates more clearly the role of DIRCO – and other

departments, including Trade and Industry – in providing

guidance to government and the business sector on economic

developments and markets; pursuing market access for South

African products; removing barriers to trade; and supporting

development of larger markets in Africa.36

The Economic Development Department’s 2010 New Growth

Path states that government support for regional growth is

both an act of solidarity and a way to enhance economic

opportunities for South African firms. Hence the ANC has

blended its pan-Africanist ideals with a policy of self-interest

premised on recognition that underdevelopment, insecurity

and mass migration in the sub-region will be detrimental to its

national interests.

Residual policy risks for SADPA

This trend towards increasing pragmatism lends support to

the notion that SADPA will be able to adopt a proactive role

in supporting the private sector in fragile and post-conflict

settings in Africa, and in maximising the impact of foreign

investors in development. It lends support to a policy approach

of engaging and consulting with South African and other private-

sector entities in PCRD contexts.

However, any policy that engages with investors as part of

PCRD efforts carries policy risks for SADPA. As Zondi notes,

there seems to be little common ground between those who

view Pretoria’s promotion of commercial interests abroad as

natural, and those who see them as inappropriate and harmful

to the country’s image. However, Zondi is over-simplistic in his

description of earlier foreign policy as principled in contrast to the

current ‘expedient’ (and, by implication, unprincipled) focus on

economic interests. This overlooks the fact that PCRD initiatives

involving business might in theory provide mutual economic

benefits both for post-conflict societies and external players.37

Engaging business in development and PCRD does not mean

surrendering principled values to underhand commercial ones.

In this sense, it is up to SADPA to make the case that facilitating

responsible business activity is beneficial for host countries

and for South Africa.

Zondi is probably correct in noting that some element of

controversy about the presence and impact of South African

business in other African countries will remain, regardless of

what business and government do by way of responsible

business practices and diplomacy.38 Pretoria cannot be seen

to simply open the door to South African firms and allow them

to dominate in post-conflict markets. But, at the same time,

a grievance will remain among those who question whether

it is justifiable for firms to operate in post-conflict settings.

Moreover, there may often be strong demand in post-

conflict African countries for South African investment (or any

investment, for that matter). This will be pertinent to SADPA’s

decision making, and it illustrates Pretoria’s ‘damned if you do,

damned if you do not’ position. Perceptions of Pretoria in the

rest of Africa are, as is well known, very mixed: other countries

both want it to lead, and resent it assuming a leadership role

or pursuing perceived self-promotion.39 Pretoria is now well

attuned to managing the negative perceptions that exist on

the continent, some informed by fear of South African firms

dominating local markets.40

Lucey and Gida’s research on attitudes in the AU towards

Pretoria’s PCRD activities revealed that most stakeholders

noted that

This trend towards increasing pragmatism lends support to the notion that SADPA will be able to adopt a proactive role in supporting the private sector


PAPER

… South Africa should use its private sector for PCRD initiatives, either by

investing in Africa, engaging businesses in the African Solidarity Initiative

[see below] and through their corporate social responsibility projects,

or through philanthropists … Some suggested that the AU could act as

guarantors for businesses doing economic rehabilitation. Stakeholders

also lamented Chinese investment and infrastructure, saying that South

Africa … should offer an alternative.41

There are three things to note from this. First, these stakeholders’ views illustrate the

lack of precision in officials’ understanding of what it means to engage the private

sector in development activities. Government can offer incentives, such as political-risk

guarantees, but it cannot necessarily just ‘use’ the private sector. Businesses will not

simply accede to becoming obliging tools of PCRD policy. In particular, South African

firms are not going to invest in post-conflict countries simply because Pretoria thinks it

would be nice of them to do so.

Secondly, stakeholders’ views welcoming greater business engagement and

investment in infrastructure are at odds with previous DIRCO suggestions that SADPA

will not prioritise economic engagements.42

The third point goes to the heart of the policy dilemma for SADPA (and DIRCO, more

generally) in terms of engaging business, especially South African firms, in PCRD

efforts. As Lucey and Gida note, initiatives to ‘use’ the private sector would need very

clear policy articulation ‘to prevent the impression that South Africa was acting out of

selfish interests rather than on the principles of solidarity’.43

Moreover, in contrast with the views of AU respondents welcoming more South African

investment, Lucey and O’Riordan note a different prevailing view. This feedback

suggests that, rather than a desire for more Pretoria-backed investment, South Africa’s

foreign policy is perceived as excessively pushy when it comes to business promotion

and trade-based relations. They note that, for some African audiences, Pretoria

increasingly risks being seen as acting in economic self-interest.44 Zondi claims that

South Africa is ‘already inadvertently flaunting its business interests without declaring

so’ in development contexts.45 As O’Riordan has noted, aid accompanying private-

sector investment often raises the ire of domestic business lobbies in host countries,

which tend to make accusations of unfair competition against donor-supported

external actors.46

One problem that besets the framing of a proactive private-sector engagement policy

is that those who suspect that SADPA’s proposed PCRD work may simply be a partly

disingenuous pathfinder for South African strategic commercial and trade interests will

find evidence for their view in the government’s own policy positions. For example, the

National Development Plan 2030 notes, with a tone of regret, that despite playing a

key role in peace settlements on the continent, South Africa ‘has gained little by way

of expanded trade and investment opportunities’.47 This wording tends to suggest that

Pretoria’s main interest in leading PCRD or negotiation efforts is not to bring peace

to troubled zones but to gain commercial advantage from post-conflict investment

South African firms are not going to invest in post-conflict countries simply because Pretoria thinks it would be nice of them to do so

NOTES THAT SOUTH AFRICA HAS GAINED LITTLE BY WAY OF EXPANDED TRADE AND

INVESTMENT OPPORTUNITIES

THE NATIONAL DEVELOPMENT PLAN

2030


opportunities. Such an impression of self-interest, whether

accurate or not, would not go down well in the recipient

country, or more widely in Africa, even if such investment were

to the advantage of the recipient country.

This regret expressed in the National Development Plan was

reiterated at a parliamentary portfolio committee seminar

on the interface between South Africa’s foreign policy and

the private sector in Africa. It was noted how it is ‘only

fair’ that South Africa gain access to trade and investment

opportunities given the conditions established by its efforts

at conflict mediation and PCRD.48 Likewise, in his review of

SADPA, Besharati argues that Pretoria has invested significant

resources in bringing about peace and stability in Africa, only

for non-South African firms to ‘end up benefiting more from

these new markets’. 49

Besharati cites the example of the Democratic Republic of

the Congo, where South Africa, in his view, has invested

substantially in peacekeeping, mediation and capacity

development, but was ‘unable to successfully broker big

mining concessions with the Congolese government’.50

Besharati would support a far more commercially self-

interested policy for SADPA. He states that, whereas

other major players in Africa (including the US, EU,

China and Turkey) are open about pursuing their national

and commercial interests, by contrast South Africa’s

development-cooperation strategy lacks dynamism

and economic drive, and has not been used ‘effectively

to support its commercial interest’ in the same way as

other countries.51

Despite noting the negative perceptions on the continent

of South Africa’s motives, Besharati then seems to

display little sensitivity to this fact. He shows no particular

awareness of how controversial it might seem to say, as

he does, that by establishing a presence in other African

countries through development activities, SADPA might

‘pave the way for South African businesses to expand their

clientele and supply base’.52 He sees the problem as one

of insufficient integration of economic considerations with

development issues; he bemoans the lack of commercial

dividends for South Africa from its external PCRD and

developmental activities.

Besharati argues that while it should ruthlessly avoid

‘mercantilism’, South Africa should, however, ‘not be

apologetic’ about its commercial interest and that without

necessarily imposing its labour, services and products on the

continent, Pretoria’s development co-operation ‘could still

produce better returns’.53 Without appearing to be concerned

about the policy implications or risk of corruption (and without

showing any grasp of the fraught ideology of ANC business

relations), he appears to see it as a weakness that Pretoria lacks

a US-style ethos whereby ‘corporations through lobby and

interest groups have a strong say on foreign policymaking’.54

Besharati notes that although Pretoria formally eschews any

concept of ‘tied’ aid, in practice its development cooperation is

linked to South African institutions, service providers, companies,

products, personnel and experts. He argues that certain voices

in Pretoria55 advocate that if local African companies cannot

be found to implement development projects, these contracts

should be awarded to South African companies.56 He calls

for ‘commercial drivers’ to be present in Pretoria’s thinking on

development cooperation.

The argument in the present paper is that, in shaping and

implementing its PCRD policies and programmes, Pretoria

should indeed engage more systematically with South African

business. Support in South Africa for funding or facilitating PCRD

activities abroad may increasingly require some demonstrable

link to South Africa’s own economic advantage. However,

Besharati’s breezy, apolitical and naive optimism about the scope

for SADPA-led programming to help South African firms pick up

concessions in conflict-affected countries is misplaced. These

issues will surely be fraught with difficulty. Such a commercially

focused approach will be controversial in recipient countries

and the donor community. Unless carefully and transparently

managed, it will lead to allegations that SADPA favours certain

South African businesspeople over others due to their perceived

elite political connections.

A closer link between supporting PCRD and resultant

commercial openings for South African firms will therefore

require clear articulation of the policy rationale (and, in

practice, the commercial appeal) of such a link. O’Riordan

is right to note that in much of Africa, South Africa (and

its private sector) is perceived as an economic, trade,

political and even security threat.57 SADPA initiatives will not

necessarily be any more palatable in recipient countries than

those of traditional donors. It may not make a difference

to traditional donor’s palatability that their projects in other

African countries are triangulated or mediated through

SAPDA. Pretoria will not necessarily receive preferential

treatment over other partners, and may even be treated with

greater suspicion than traditional donors.58

A closer link between supporting PCRD and resultant commercial openings will require clear articulation of the policy rationale of such a link


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This is a real risk to SADPA’s credibility and to South Africa’s reputation in Africa. The

risk of South Africa’s perceived commercial self-interest outweighing the humanitarian

motives behind its PCRD support partly accounts for why DIRCO is reluctant to

engage the private-sector in PCRD. It faces the policy problem of treating vulnerable

post-conflict societies primarily as commercial opportunities. DIRCO’s hesitancy is also

a manifestation of the ambivalence shown towards big business in parts of the ANC-

led alliance.

Instead, SADPA can certainly engage with foreign and South African firms to

incentivise developmental activities, but it will need to carefully explore and explain

the mutuality of such relationships. The policy risks are manageable, but Besharati’s

approach underestimates the serious reputational risk to Pretoria should SADPA

explicitly link, as he does, PCRD to the expectation of commercial opportunities or

rewards.59 There would be the risk that South African military deployments in the

name of pan-African peacekeeping might be seen (fairly or not) as protecting assets

or opportunities of commercial value.

States affected by conflict generally welcome investor interest and the development

spin-offs from commercial activities. Given the shift towards emphasising economic

aspects of diplomacy, South African and global development policy is conducive

to SADPA being proactive about engaging the private sector in PCRD. Authority

for such an engaged approach can be found in the AU’s African Solidarity Initiative,

launched in July 2012 to help member states emerging from conflict. This speaks

of efforts to mobilise financial and in-kind contributions of the private sector.60 More

generally, SADPA, by its very title, is intended to focus on partnerships, while its

limited reach and resources require it to be innovative,61 yet to emphasise local

ownership of PCRD processes.62 These factors suggest an open-minded approach

to the possible role of private-sector engagement by SADPA in fragile, conflict-

affected and post-conflict settings.

Before outlining how SADPA might achieve this, it is instructive to look at the example

of one particular country. This case study illustrates both the risks and rewards, in

policy terms, of involving business in development objectives.

Comparisons and insights: the case of Brazil

Like many African countries, South Africa looks to Brazil’s economic growth and

social policies for models. There is also a strong likelihood that DIRCO would look to

Brazil’s development activities in Africa to inform SADPA’s role. The comparison with

Brazil is useful because its private-sector engagement and discreet pursuit of strategic

commercial interests, alongside its rhetoric of solidarity, are similar to Pretoria’s.

Brazil projects its development assistance in Africa as demand-driven and involving

knowledge transfer, capacity building, use of local labour, project designs based on

local needs, the absence of conditions and respect for sovereignty.63 Unlike South

Africa, Brazil has not explicitly focused on post-conflict African countries or PCRD

activities, but in reality it has done so given its interests in countries such as Guinea,

Angola and Mozambique.

The trend is towards seeking explicit alignments between commercial goals of business and the national or local development agenda

SOUTH AFRICA LOOKS TO BRAZIL’S ECONOMIC GROWTH AND SOCIAL POLICIES FOR MODELS


Since 1987 the Brazilian Cooperation Agency (Agência

Brasileira de Cooperação – ABC) has been part of the

Ministry of Foreign Affairs. The ABC saw rapid growth in

African activities (mainly involving technical cooperation,

institution building and skills transfer in agribusiness, social

policy and other areas of Brazilian expertise and interest)

under the Lula government. Since 2012, however, under

President Dilma, the ABC has experienced swinging budget

cuts and has had to refuse requests for technical assistance,

particularly from some African countries.64 In some ways –

which can be instructive to SADPA’s future role – the ABC’s

technical cooperation offsets the effect of limited financial

resources by harnessing the resources of other Brazilian

ministries, avoiding ‘hard’ infrastructure projects, and through

triangulated development partnerships, whereby traditional

donors (mainly Japanese) finance Brazilian provision of

technical advice and support.

Like Pretoria’s vision of economic diplomacy, one aspect of

Brazil’s approach in Africa has been its self-image of destiny

as a leading country, in addition to its genuine poverty-

reduction motives. One driver of the ABC’s work has been

the provision of market penetration for Brazilian business

and creating opportunities for Brazilian firms in areas such as

agribusiness.65 In mid-2013 it was reportedly mooted that the

ABC would be incorporated into the Ministry of Development

and International Trade, suggesting a stronger emphasis on

this market-related driver.66 Burges notes that under Dilma a

‘more commercially-minded approach to bilateral engagement’

has been adopted. Within the ministry of trade, a technical

group has been formed to study economic relations with

Africa, coordinate Brazilian government action, and encourage

more trade and investment.67 Burges describes how Brazil’s

approach has shifted: whereas under Lula, the government

had worked to pull Brazilian firms towards Africa, the Dilma

government expects its businesses (including state-owned

enterprises) to lead the way, with the ABC following in support

to help maximise (and smooth out) the development impact of

Brazilian investment.

Far from being perceived as improper, this growing emphasis

of the ABC on development assistance that delivers mutual

economic advantage may well be welcomed by African partner

countries. However, for historical and political reasons there

are obvious limits to analogies between the ABC and SADPA,

which might detract from the argument that Pretoria could also

pursue an explicit mutual economic agenda through SADPA

– one that promotes the interests of South African firms. It is

necessary to develop this point briefly. There is a tendency

among South African commentators on the Brazil–Africa link

to adopt an uncritical approach, attributing excessive weight

to Brazil’s rhetoric on South-South solidarity while insufficiently

accounting for the country’s commercial rationales for supporting

the ABC’s work in Africa.

For example, Alvez’s 2013 paper on the ABC’s activities in

Africa contains no discussion of the obvious links between that

agency’s initiatives and the commercial strategic interests of

state-owned Brazilian firms. She notes that Brazil’s highest-profile

ABC-coordinated project in the African health sector has been

a $23 million antiretroviral programme in Mozambique, and that

the Vale Foundation covered 80% of the factory rehabilitation

cost in that project. However, Alvez’s analysis stops there. There

is no comment on the fact that state-owned mining giant Vale

has deep interests in Mozambican coal deposits in the Tete

Province.68 One would have to be naive not to see the relevance

of the company’s support for the ABC’s work there. This is so

even if the outcome is one that is welcomed by the host country

and commendable in corporate social-investment terms.

Meanwhile, Zondi’s commentary on Alvez’s work draws a

contrast between the ABC and traditional donors by stating

that the ABC’s assistance ‘is not tied to political pre-conditions

and power play’ – as if Brazil had no pragmatic self-interest in

its African engagement. In reality, Brazil’s type of engagement in

Africa is not fundamentally different from that of other donors.

Listing Brazilian development projects, Zondi says that ‘other

state agencies like Petrobas and Odebrecht are also involved

in several other projects in various parts of Africa’.69 Yet Zondi

makes nothing of the fact that these two entities are major

Brazilian state-owned energy and private construction firms,

respectively, and not merely technical development arms.

Two main points can be drawn from this that are pertinent to

SADPA’s role in engaging the private sector, both generally

and in PCRD contexts. Firstly, if SADPA sees Brazil’s approach

in Africa through the ABC as instructive, it is noteworthy that

this approach appears to have a fairly clear orientation. That

orientation is towards facilitating not just greater economic

productivity and trade for recipient countries, but also generating

opportunities for Brazilian firms. This is so in general terms

(improving the market) and specific terms (improving the

social and political palatability of major investments by national

firms). Brazil is not simply in Africa to show its South-South

fraternity, just as Pretoria’s policy in Africa is tied to its national

interests. Recipient countries are not likely to find that surprising.

SADPA can follow this example, including through triangulated

Brazil’s type of engagement in Africa is not fundamentally different from that of other donors


PAPER

relationships with traditional donors, and drawing in or

supporting South African private-sector interests. However, this

approach may not be received in Africa in the same way as

Brazil’s initiatives have.

This relates to the second point. Although he does not

remark on the relevance of the ABC’s initiatives to Brazilian

firms operating in Africa, Zondi does issue a cautionary

note. He observes that Brazil must ‘guard against narrow

national interests creeping in, turning its cooperation into

a mere cover for exploitative economic goals’ and avoid

using the ABC simply to ‘open the way for its commercial

enterprises’.70

This warning is apposite to SADPA and Pretoria’s

strategic intentions, as discussed in the previous section.

Nevertheless, an important caveat is necessary. An important

point is that development-related activities in Africa are not

exploitative simply because they are part of the strategies

and operations of a for-profit entity. To suggest otherwise

is to assume that African countries do not welcome foreign

investment, or that all private-sector engagement by

development agencies is simply a disguise for commercial

interests. Instead, the trend is towards seeking explicit

alignments between commercial goals of business and

the national or local development agenda. This paper will

conclude that SADPA should follow and develop this trend,

managing policy risks along the way.

The considerations in the previous two sections (looking at

South African and AU policy, and the Brazilian comparison)

address the ‘why’ question of SADPA’s engagement with

business. The next section turns to the ‘how’ question of

realising this objective.

SADPA and private-sector engagement: modalities

SADPA’s main role will be to develop a coherent strategy

on what other South African state-owned entities are doing

in relation to PCRD in Africa, and coordinating with other

donors and development actors. Given the acknowledged

significance of inclusive economic revitalisation in

consolidating peace or reducing fragility, SADPA should also

consider the private sector, including South African firms,

foreign firms and host-country enterprises, as development

actors with whom to coordinate appropriate activities.71 This

‘appropriateness’ element will assume some significance.

As the discussion of Brazil’s approach reveals, development

programming that promotes national (state-owned or private)

firms’ interests is not necessarily inappropriate and will often

provide prospects for job creation and growth in post-conflict

settings. Yet there will be a premium on transparency and

communication that emphasises the local benefits of SADPA-

facilitated business activity.

The first premise for SADPA must surely be that the

organisation has limited resources and political capital, and

must be judicious and consultative about its programming

intentions and actions. Pretoria has noteworthy foreign-

policy objectives in relation to development programming,

and some experience in delivering assistance, but lacks the

financial means or personnel to realise ambitious development-

partnership goals in Africa.72

The African Renaissance Fund, which SADPA will subsume,

is unlikely to be allocated more than R500 million (about $50

million) annually. SADPA will experience the challenges faced

by all agencies involved in development generally, PCRD and

private-sector engagement. But, unlike DIRCO or established

donors’ intentions to triangulate OECD aid through BRICS

countries to recipient ones, it may face even greater challenges

than non-African donors. In particular, it cannot be assumed

that Pretoria’s officials, purely by virtue of being from an African

country themselves, will understand other African countries’ and

regions’ conflict dynamics better than the experienced staff of

traditional donors and international institutions, or the personnel

of transnational NGOs.73

This suggests that DIRCO and other organisations involved in

establishing SADPA ought to develop its strategy by recognising

its limited resources and seeking a comparative advantage by

coordinating with other, better-resourced and skilled entities,

including South Africa’s own development-finance institutions.

Such an approach would be advantageous given that engaging

with local, South African and third-country investors and

businesses can have a force-multiplier effect on developmental

initiatives. SADPA is unlikely to achieve much impact unless it

displays the will and ability to engage at the wider level and in

country-specific donor platforms, building local developmental

alliances, including ones that involve local and foreign firms in

post-conflict settings.

When examining how SADPA might include a private-sector

strategy in its PCRD work, it is worth reiterating the three main

policy functions that might apply to external actors involved

in private-sector programming in fragile and PCRD contexts.

Those three activities are helping to develop local businesses,

encouraging foreign investment and promoting responsible

business practices. These activities are, or should be, seen as

interconnected. In particular, where major foreign investment

is forthcoming in a post-conflict setting it can help foster

local business activity aimed at supplying and servicing the

major investor.

13ISS PAPER 269 • OCTOBER 2014

SADPA needs to take into account the huge diversity in the private sector. Different

industries have different risk appetites, time frames and local footprints, for example.74

For some industries (such as construction or security), PCRD settings give them a

particular opportunity, and policymakers will not find it hard to persuade such firms to

enter. The issue will then become whether the donor can influence conflict-sensitive

business practices around hiring, land and water use, private-security conduct, and so

on. Yet most potential investors will need reassurance about political risks and/or help

with designing appropriate developmental projects. For meaningful collaboration, the

question for SADPA would be, how can it help businesses overcome the challenges

they face in conflict-affected settings in a responsible and sustainable manner?

Firms’ diverse needs and concerns make it important that there are mechanisms for

systematic and subjective engagement with policymakers to foster pro-social, pro-

peace business activity.

With these points in mind, SADPA could consider at least six sorts of initiatives to

cover the various direct and indirect PCRD roles of private-sector actors:

• Risk guarantees. Together with other government institutions and/or major

multilateral organisations, SADPA could facilitate provision of financing

mechanisms (such as political-risk guarantees), to increase the likelihood that

firms will enter risky post-conflict settings and to reduce their financing and

insurance costs. Such financial support will require clear explanation, and

transparent procedures will be needed to deter abuse of state-backed schemes

that favour businesspeople with elite political connections. Given the limited scale

of resources, SADPA should arguably not focus on the provision of financial

incentives of this sort.

• Reform and governance. SADPA could help facilitate (and co-fund with larger

donors) the provision, by other South African agencies, of expertise to post-conflict

authorities on issues relevant to stimulating or attracting appropriate business

activity.75 For instance, South Africa has a strong reputation for efficiency and

effectiveness in tax assessment and collection. Its officials could help build local

capacity to design a business climate and regulatory regimes that incentivise the

involvement of business. Given the difficulty of attracting most firms to fragile states,

such a regulatory regime would require close consultation with affected business

groups. SADPA-facilitated expertise could focus on helping host countries negotiate

fiscal and other terms surrounding resources or other investments. South Africa

could in this way help attract investment while establishing the regulatory and

taxation basis for a self-financing post-conflict state.

• Leveraging big business. Assuming a firm is already, or will soon be operating in

a post-conflict setting, SADPA could explore how to maximise its developmental

impact while reinforcing the firm’s social legitimacy and preferred-partner status with

the host government. Besharati has argued that Pretoria should engage better with

the private sector to align its corporate social responsibility (what he calls ‘charity’)

SADPA could promote awareness and implementation of responsible and conflict-sensitive business practices by South African firms intent on operating in PCRD and fragile settings

THE AFRICAN RENAISSANCE FUND, WHICH SADPA WILL

SUBSUME, IS UNLIKELY TO BE ALLOCATED MORE THAN

(ABOUT $50 MILLION) ANNUALLY

R500 MILLION


PAPER

work with public-development priorities abroad.76 This may be the case, but far

greater development potential lies in finding developmental linkages with companies’

core business activities, and not their social-investment activities. For instance,

Anglo American’s procurement budget is over 100 times larger than its social-

investment budget. It therefore makes far more sense for the firm, and development

actors, to harness some of that procurement funding in ways that develop local

enterprises. Deliberate leveraging of core business activities has far more potential

developmental impact than corporate social-investment programmes. Firms get to

mitigate socio-political risk, build networks of local suppliers and skills providers, and

reduce reliance on external supply chains.

• Regulating responsibility. SADPA could promote awareness and implementation

of responsible and conflict-sensitive business practices by South African firms intent

on operating in PCRD and fragile settings. SADPA and other agencies can readily

draw on the evolving framework for responsible investment and business activity. In

particular, the UN Guiding Principles on Business and Human Rights indicate a role

for South African state agencies to play in relation to South African firms operating

abroad, especially in areas of vulnerability.77

• Sharing expertise. SADPA could become a form of clearing house for various types

of expertise that exist within the South African private sector that may be applicable

to conflict-affected African areas, and to firms investing there. It could partner with a

civil-society organisation, corporate foundation and/or established donor to manage

this portal for sharing expertise. In particular, South Africa’s private sector has long-

established experience of corporate social-investment schemes, which SADPA

could help to bring to PCRD settings.78 Its public agencies have considerable

experience in formal public–private partnerships, which are in vogue with multilateral

development banks with a PCRD mandate. SADPA could begin to build a network

capable of informing it of the sorts of skills and services that South African business

might be able to provide in PCRD. Lucey and O’Riordan have argued that along

with universities and research institutes, SADPA should build relationships with

South Africa’s ‘leading private-sector organisations’ to start identifying skill sets and

services that could benefit its objectives.79

• Dialogue platforms. In settings where it has some advantage in terms of access or

preferability to other donors, SADPA could broker public–private dialogue on PCRD

in particular countries, including through the aid-coordination platforms envisaged by

the New Deal on Fragile States. This role might prove the most significant. Whether

in terms of business-regulation reform or finding developmental linkages from

core business activities, the problem is often a lack of information. By supporting

country-level public–private dialogue platforms, SADPA could help find alignments

of interest between local authorities, population groups and business chambers or

major investors. For instance, such platforms could look for ways to develop the

capacity of local firms so they can act as suppliers to major investors. In this way,

SADPA would be using private-sector engagement to promote local private-sector

development in PCRD processes. And it would enable initiatives to be designed in

Scaling up the developmental impact of business requires governments to develop transparent and accountable dialogue platforms

ALONG WITH UNIVERSITIES AND RESEARCH INSTITUTES,

SADPA SHOULD BUILD RELATIONSHIPS WITH SOUTH AFRICA’S LEADING PRIVATE-SECTOR ORGANISATIONS


conflict-sensitive ways that do not exacerbate ethnic or other

forms of tension through the disproportionate benefiting of

certain groups.

Some comment is required on SADPA’s role in facilitating

the sharing of information about the demand and supply

of particular expertise for PCRD. Some expertise might be

provided pro bono or it might be funded by foundations or

other (triangulated) donors. Yet, in some ways, SADPA would

be facilitating private providers seeking opportunities in PCRD

settings. In offering to promote the sharing of private-sector

expertise for public purposes, it would need to guard against

simply acting as a clearing house for consulting contracts

for South African and other development experts. This leads

to a further reality-check issue. Some businesses will relish

PCRD opportunities. By assisting them in transparent ways,

SADPA can help promote recovery in affected societies. Yet

most firms will be far more circumspect and reluctant about

such settings. SADPA cannot beg the private-sector to

support efforts to revitalise post-conflict settings or stabilise

fragile ones. It must articulate such needs in ways that align

with the commercial imperatives of business. Besharati is

therefore right to note that while SADPA hopes to receive

funding from other sources, such as the private corporate

and philanthropic sectors, these actors will have their own

strategic interests. They will be looking for a rationale that is

related to their return on investment, and ‘the [commercial]

value of contributing to public goods’. Therefore, awareness

of commercial concerns must be better integrated into

development cooperation policy.80

The sixth point above (‘dialogue platforms’) may prove the

most significant. One of SADPA’s most important functions

in relation to the private sector’s potential role in PCRD will

probably be an internal one – to promote a coherent approach

among various government departments in relation to the

role and interests of business in PCRD activities. It will need

to work closely with the Department of Trade and Industry.

Besharati notes that government’s ability to rally private and

public stakeholders towards the same regional development

vision is very limited.81 He rightly calls for the establishment of

consultation mechanisms between foreign-affairs officials and

the South African private sector.82

The essence of engagement entails a platform for public–

private dialogue – in this case, SADPA, the business

community, the host government and other donors. Scaling up

the developmental impact of business requires governments

to develop transparent and accountable dialogue platforms

that will engage business in the design and delivery of

national development plans. Discussion can help identify

developmental bottlenecks holding back the potential for

growth or job creation. Hence the publication of a report this year

noting that the policy challenge is to entrench as a ‘new normal’

a pattern of productive, systematic public–private dialogue and

cooperation on development obstacles and goals.83 SADPA

will need to develop clearer parameters for such engagement

to guard against any suggestion that its policy supports private

enterprise over the public interest of South Africans or host-

country citizens.

Conclusion

Most businesses require a peaceful environment for them

to prosper. On the other hand, to build and maintain peace

successfully also requires businesses to prosper. This symbiosis

and the various strengths, interests and incentives that private-

sector actors can bring to bear underscore a policymaking

approach that is open to attracting business to risky places,

harnessing the developmental impact of core business activities,

seeking peacebuilding inputs from business actors and regulating

conflict-sensitive business practices. As argued elsewhere, the

private sector may lack the legitimacy and responsibilities of

government, yet it is clearly a major stakeholder in long-term

development and stability.84

SADPA will find plenty of opportunity to explore how to develop

systematic, strategic and appropriate engagement with the

business community in pursuit of shared interests and with the

consent and benefit of host societies and governments. Should it

adopt a policy on private-sector development and engagement,

it would do so in an increasingly permissive global development

environment that is more pragmatic about public–private

collaboration. An approach that seeks to maximise mutual

conflict-sensitive economic development gains in post-conflict

societies will also align with Pretoria’s diplomatic policy shift

towards helping increase prosperity in Africa while growing its

own economic potential.

Yet the provision and coordination of development assistance in

conflict-affected regions is always highly political and contested,

even without the private-sector dimension. Any perception,

therefore, that SADPA’s approach is intended to facilitate South

African private-sector or parastatal investment would damage

its credibility long before the agency is even launched. Post-

conflict private-sector engagement is not about distributing

consultancies and concessions, but about local economic

The private sector may lack the legitimacy and responsibilities of government, yet it is clearly a major stakeholder in long-term development and stability


PAPER

empowerment and derivative developmental impact within an operating regime that is

commercially viable. The merits of SADPA engaging business to help deliver the PCRD

agenda outweigh the risks, but it will require transparency and reassurance that it is

acting in good faith.

Notes1 The two forms of activity (private-sector engagement and private-sector development) are linked. By

engaging with established, big and foreign businesses, donors are often in the best position to help build the local private sector by linking the latter to the supply-chain and service needs of the former.

2 This paper deals with post-conflict settings, although development policy ought to address fragility more generally. The post-conflict literature is vast. For recent Africa-focused contributions by South African authors, see, generally, Heidi Hudson, Post-conflict reconstruction and development in Africa, Cape Town: UCT Press, 2013; Simone Haysom, Debates in post-conflict development in Africa, ISS paper no 251, Pretoria: ISS, 2014.

3 This paper does not concern itself with illicit economies of conflict, nor with the (typically vital) informal economy, but with formal-sector enterprises with which entities like SADPA might engage. It considers local and foreign state-owned firms within the private sector’ where these entities’ where they pursue commercial opportunities.

4 Often the prevailing macroeconomic environment will be relevant to recovery prospects – for example, for commodity-dependent economies. This paper does not consider such global dynamics.

5 The UN’s Guiding Principles on Business and Human Rights devotes attention to the responsibilities of home and host states for business conduct in fragile and conflict-affected areas. See A/HRC/17/31, 21 March 2011, Part IB, 7; UNHRC Resolution 17/4, 16 June 2011.

6 Again, there is a great deal of literature on this. For a succinct overview, see Robert Lamb, Sadika Hameed and Kathryn Mixon, Private-sector development in fragile, conflict-affected and violent countries, Washington DC: CSIS, 2013.

7 See A Hoffman, From ‘business as usual’ to ‘business for peace’: Unpacking the conflict-sensitivity narrative, The Hague: Clingendael Institute, 2014.

8 See Jolyon Ford, Engaging the private sector in Africa’s peaceful development, ISS policy brief no 55, Pretoria: ISS, 2014.

9 Jolyon Ford, Regulating business for peace, Cambridge University Press (forthcoming 2015).

10 See Lauren Hutton, Internal and external dilemmas of peacebuilding in Africa, ISS paper no 250, Pretoria: ISS, 2014.

11 Ford (forthcoming 2015), Ch. 1.

12 See the declaration of the fourth High-Level Forum on Aid Effectiveness, Busan, 1 December 2011, 3. See also www.pbsbdialogue.org/ and www.g7plus.org/new-deal-document. The New Deal omits the private sector, but the Busan Declaration explicitly recognises the private sector’s significance to development goals.

13 Final Consensus Statement of the Global Partnership for Effective Development Cooperation, Mexico City, 16 April 2014, 16; 31–34; see also the Busan Declaration, referenced above.

14 A new global partnership, www.post2015hlp.org/the-report. For an early report into the private sector’s development role in Africa, see United Nations Office of the Special Adviser on Africa, The contribution of the private sector to NEPAD, New York, 2006. Principle XI of the Charter on Public–Private Dialogue in Development is devoted to emphasising the particular value of cross-sector engagement and cooperation in post-conflict and crisis environments, see Charter Done by Consensus at the first International Conference on Public–Private Dialogue, Paris, 2006.

15 See A/67/499-S/2012/746, 8 October 2012.

16 For an overview of donor policies on engaging the private sector, see, for example, Shannon Kindornay and Fraser Reilly-King, Investing in the business of development, Ottawa: NSI/CCIC, 2013.

17 For an accessible overview of the tone and nature of these criticisms, see Brian Tomlinson (ed.) Aid and the private sector: Catalysing poverty reduction and development? The Reality of Aid International Coordinating Committee Report, Manila: IBON, 2012.

18 See Jolyon Ford, Engaging the private sector in Africa’s peaceful development, ISS policy brief no 55, Pretoria: ISS, 2014.

19 Ibid.

20 South Africa Government, White Paper on South Africa’s foreign policy, Pretoria, 2011, 20–23, www.safpi.org/sites/default/files/publications/white_paper_on_sa_foreign_policy-building_a_better_world_20110513.pdf.

21 For one version of the history of South Africa’s post-1994 development and PCRD initiatives in Africa, see Neissan Besharati, South African Development Partnership Agency: Strategic aid or development

http://www.pbsbdialogue.org/

http://www.safpi.org/sites/default/files/publications/white_paper_on_sa_foreign_policy-building_a_better_world_20110513.pdf

http://www.safpi.org/sites/default/files/publications/white_paper_on_sa_foreign_policy-building_a_better_world_20110513.pdf


packages for Africa? Report no 12 (Economic Diplomacy), Pretoria: SAIIA, 2013, 17–22.

22 African Union, PCRD Framework, Addis Ababa, 2006, www.peaceau.org/uploads/pcrd-policyframwowork-eng.pdf; see also Amanda Lucey and Sibongile Gida, Enhancing South Africa’s post-conflict development role in the African Union, ISS paper no 256, Pretoria: ISS, 2014, 3 ff. The institutional architecture of the AU peace and conflict system has no real capacity to coordinate PCRD.

23 See Articles 14–16 of the protocol, www.au.int/en/sites/default/files/Protocol_peace_and_security.pdf.

24 See Amanda Lucey and Sibongile Gida, Enhancing South Africa’s post-conflict development role in the African Union, ISS paper no 256, Pretoria: ISS, 2014, 9.

25 Ibid., in reference to South Africa’s 2014 defence-policy review.

26 Amanda Lucey and Alex O’Riordan, South Africa and aid effectiveness: Lessons for SADPA, ISS paper no 252, Pretoria: ISS, 2014, 6, 9; see also Neissan Besharati, South African Development Partnership Agency: Strategic aid or development packages for Africa? Report no 12 (Economic Diplomacy), Pretoria: SAIIA, 2013, 28–29. On the wider rationale for SADPA, see, for example, Neissan Besharati, South African Development Partnership Agency: Strategic aid or development packages for Africa? Report no 12 (Economic Diplomacy), Pretoria: SAIIA, 2013, 31 ff, and the works referenced below.

27 For a critical take, see Laurie Nathan, African solutions to African problems: South Africa’s foreign policy, report no 53, Pretoria: SAIIA, 2013.

28 Alexander O’Riordan, South Africa seems woefully unprepared to become a donor, policy brief no 47, Pretoria: SAFPI, September 2013; Alexander O’Riordan, South Africa north of the border: Options for SADPA, policy brief no 41, Pretoria: SAFPI, July 2013.

29 See Amanda Lucey and Alex O’Riordan, South Africa and aid effectiveness: Lessons for SADPA, ISS paper no 252, Pretoria: ISS, 2014.

30 O’Riordan observes that South Africa has not been particularly heavily involved in the OECD-led aid effectiveness debates, either globally or in individual countries, see Alexander O’Riordan, South Africa seems woefully unprepared to become a donor, policy brief no 47, Pretoria: SAFPI, September 2013; Alexander O’Riordan, South Africa north of the border: Options for SADPA, policy brief no 41, Pretoria: SAFPI, July 2013.

31 This is one finding of the various papers produced in the ISS research project by Cheryl Hendricks and Amanda Lucey, Enhancing South Africa’s post-conflict development and peacebuilding activity in Africa, Pretoria: ISS 2013.

32 See, generally, Antoinette Valsalmakis, The role of business in South Africa’s post-apartheid economic diplomacy, PhD thesis, University of Birmingham, May 2012. See also Tim Hughes, Working for development in southern Africa: Bridging the gap between business and government, paper no 114, Pretoria, South African Institute for International Affairs, 2011.

33 See Neissan Besharati, South African Development Partnership Agency: Strategic aid or development packages for Africa? Report no 12 (Economic Diplomacy), Pretoria: SAIIA, 2013.

34 See Parliament of South Africa, Report of the Portfolio Committee on International Relations and Cooperation (tabling of report dated 19 August 2012 of a March 2012 report on foreign policy and business in Africa), www.safpi.org/sites/default/files/publications/IRportfoliocommitteeSAinc.pdf.

35 Siphamandla Zondi, Options for guiding the conduct of SA Inc., on the African continent, policy brief no 13, Pretoria: SAFPI, 2012, 1–2.

36 The DTI is likely to be an important internal player, along with the private sector, pushing for SADPA’s strategy to include fostering private-sector linkages and acting as a pathfinder to South African investment.

37 Siphamandla Zondi, Options for guiding the conduct of SA Inc., on the African continent, policy brief no 13, Pretoria: SAFPI, 2012, 2–3.

38 Ibid., 5–6, including some options for influencing responsible South African business in Africa.

39 See, for example, Amanda Lucey and Sibongile Gida, Enhancing South Africa’s post-conflict development role in the African Union, ISS paper no 256, Pretoria: ISS, 2014, 7–8.

40 Neissan Besharati, South African Development Partnership Agency: Strategic aid or development packages for Africa? Report no 12 (Economic Diplomacy), Pretoria: SAIIA, 2013, 23.

41 Amanda Lucey and Sibongile Gida, Enhancing South Africa’s post-conflict development role in the African Union, ISS paper no 256, Pretoria: ISS, 2014, 11.

42 As Lucey and Gida (ibid.) note, this strategy not to prioritise economic engagement (including private-sector development and engaging business) ‘seems somewhat naïve and at odds with [potential recipient country] demands.’

43 Ibid.

44 Amanda Lucey and Alex O’Riordan, South Africa and aid effectiveness: Lessons for SADPA, ISS paper no 252, Pretoria: ISS, 2014, 5.

45 Siphamandla Zondi, Options for guiding the conduct of SA Inc., on the African continent, policy brief no 13, Pretoria: SAFPI, 2012, 2.

46 Alexander O’Riordan, South Africa north of the border: Options for SADPA, policy brief no 41, Pretoria: SAFPI, July 2013, 2–3.

47 National Planning Commission, National Development Plan 2030: Our Future: Make it Work, Pretoria, 2013, 238–239, www.npconline.co.za.

48 See Parliament of South Africa, Report of the Portfolio Committee on International Relations and Cooperation (tabling of report dated 19 August 2012 of a March 2012 report on foreign policy and business in Africa), www.safpi.org/sites/default/files/publications/IRportfoliocommitteeSAinc.pdf.


50 Ibid Besharati 2013. Later (at 46) in the context of public procurement, Besharati does acknowledge the potential controversies here, noting the risk of SADPA initiatives that ‘fuel commercial gain that benefits mainly elite capitalist groups but does not contribute to pro-poor development’.

51 Ibid., 26.

52 Ibid.

53 Ibid., 26–7.

54 Ibid., 26–7.

55 He cites business, the DTI and the Development Bank of South Africa.


57 Alexander O’Riordan, South Africa north of the border: Options for SADPA, policy brief no 41, Pretoria: SAFPI, July 2013, 3.

58 Ibid.

59 The potential controversy could also raise reputational risks for firms involved in such relationships.

60 AU, Resolution of the 19th Ordinary Session of the Assembly of Heads of State and Government, July 2012, www.peaceau.org/en/topic/the-african-solidarity-initiative-asi. The resolution only mentions African institutions. It is the concept note produced for the initiative that mentions the private sector as a potential partner, see www.peaceau.org/uploads/au-dec-425-xix-en.pdf.

61 In terms of innovation, see Amanda Lucey and Sibongile Gida, Enhancing South Africa’s post-conflict development role in the African Union, ISS paper no 256, Pretoria: ISS, 2014, note 61.


PAPER

62 For a succinct overview of the significance that SADPA should place on local ownership of development processes, see Amanda Lucey and Alex O’Riordan, South Africa and aid effectiveness: Lessons for SADPA, ISS paper no 252, Pretoria: ISS, 2014, 8–9.

63 For an overview, see Ana Cristina Alvez, Brazil–Africa technical cooperation: Structure, achievements and challenges, policy brief no 69, Pretoria: SAIIA, 2013.

64 See Sean Burges, Brazilian development cooperation: Here to stay, but how long? DevPolicy blog-post (Canberra), 5 March 2014, http://devpolicy.org/brazilian-development-cooperation-here-to-stay-but-how-strong-20140305.

65 Ibid.

66 Ibid. It appears that the ABC will remain within Brazil’s Ministry of Foreign Affairs, but with closer links to other departments responsible for trade and investment.

67 Ibid.

68 Ana Cristina Alvez, Brazil–Africa technical cooperation: Structure, achievements and challenges, policy brief no 69, Pretoria: SAIIA, 2013.

69 Siphamandla Zondi, Brazil and Africa: Cooperation for endogenous development? Global Insight, 101, Pretoria: Institute for Global Dialogue, 2013, 3.

70 Ibid.

71 SADPA should include South African state-owned enterprises in this conceptualisation, where they are operating in fragile African states as commercial (for-profit) equity investors or service providers.

72 See Alexander O’Riordan, South Africa north of the border: Options for SADPA, policy brief no 41, Pretoria: SAFPI, July 2013. Elsewhere, O’Riordan argues that there is no evidence for the view that South Africa’s expertise is superior to that of traditional donors, or that African peers seek help in replicating South Africa’s developmental model, see Alexander O’Riordan, South Africa seems woefully unprepared to become a donor, policy brief no 47, Pretoria: SAFPI, September 2013, 1.

73 Lucey and O’Riordan also note the risk that SADPA projects that are not relevant or contextualised will erode its reputation, supporting the suspicion that ‘it knows no more about Africa than any other foreign donor or development partner’, see Amanda Lucey and Alex O’Riordan, South Africa and aid effectiveness: Lessons for SADPA, ISS paper no 252, Pretoria: ISS, 2014, 10. Besharati acknowledges that South Africans cannot claim a better understanding of the continent’s myriad dynamics than traditional donors, see Neissan Besharati, South African Development Partnership Agency: Strategic aid or development packages for Africa? Report no 12 (Economic Diplomacy), Pretoria: SAIIA, 2013.

74 In addition to sectoral diversity, even within a particular sector, different firms can display very different approaches to issues such as political risk.

75 SADPA could source this expertise from South African private firms. However, the notion of SADPA facilitating private-sector activity in post-conflict settings does not entail SADPA simply becoming a booking agency for private-consultancy contracts for South African providers.


77 UN Guiding Principles on Business and Human Rights devotes attention to the responsibilities of home and host states for business conduct in fragile and conflict-affected areas, UNHRC Resolution 17/4, 16 June 2011.


79 See Amanda Lucey and Alex O’Riordan, South Africa and aid effectiveness: Lessons for SADPA, ISS paper no 252, Pretoria: ISS, 2014, 6–8. One of these linkages may be for SADPA (and DIRCO) to draw from the analytical capacity of private firms with experience of the political and business dynamics of a potential programme country.

80 Neissan Besharati, South African Development Partnership Agency: Strategic aid or development packages for Africa? Report no 12 (Economic Diplomacy), Pretoria: SAIIA, 2013, 40–43.

81 Ibid., 26–27.

82 Ibid., 43.

83 See Unleashing the power of business: A practical roadmap to systematically scale-up the engagement of business as a partner in development, Oxford: The Partnering Initiative, 2014, www.bpdroadmap.org/.

84 Jolyon Ford, Engaging the private sector in Africa’s peaceful development, ISS policy brief no 55, Pretoria: ISS, 2014.

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About the authorDr Jolyon Ford is an associate of the Global Economic Governance

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